Is disruption a must for start-ups?
The short answer is: No.
Disruptors are one-of-a-kind. That’s because they need to begin in a space within the industry where no one else inhabits since they start in low-end or new markets and target customers whom incumbents routinely overlook. The industry, however, is a lot more tolerant. It has plenty of space for competition and can accommodate several businesses offering similar products and services.
When Apple released the iPhone, it disrupted the PC by being able to do all that a PC could yet with a portability that no PC could beat. Apple became a disruptor. A little more than a decade down the road, there are now countless smartphone brands vying for a piece of the pie. Apple may have started the ball rolling, but there are now many players in the game.
You need not be a disruptor to enter an industry.
How start-ups can benefit from disruption
That being said, there are some things start-ups can learn from disruptors to help them succeed.
1. Solve problems
Disruptors solve problems.
In 2008, President Barak Obama was supposed to a give a speech to the Democratic National Committee at the Pepsi Centre which could seat 18,000. Then, the venue was changed to Invesco Field which had capacity for 80,000. The problem was there were not enough hotels rooms to accommodate the increase in numbers. AirBnb came in with home-sharing and effectively turned every homeowner with a spare room or mattress into a Bed & Breakfast. They solved a problem.
If you can find a solution to a problem, you would not only have found an inroad into the industry, you would have a ready market for your business.
2. Make it cheap
Disruptors tend to entice with lower prices. And they make it possible by working on a different business model from the incumbents. This is something any start-up can benefit from.
You would think that the mattress business is quite stead. Yet, mattress innovator, Purple, has managed to turn it around not just with an innovative product, but with a novel business model. Purple developed a new high-tech mattress – soft enough to be comfortable, firm enough to support – but at much more affordable prices than its competitors.
It was able to undercut the competition because it uses a direct-to-consumer e-commerce model instead of licensing its technology to manufacturers or selling to retailers. Going the online route meant cutting out the middleman which eliminated royalties, manufacturer profits, distributor and wholesale mark-ups and sales commissions.
Then, it went one step further and added convenience to the mix. Customers could try the mattress for 100 nights. If they didn’t like it, Purple would simply come and pick up the mattress and give them a refund. That took the risk out of buying the mattress online.
3. Don’t wake the giant
Disruptors are able to literally steal the business from under the noses of the corporates because they often appear harmless. At first.
Hotels didn’t bat an eyelid when AirBnb first stepped in because, frankly, a homestay is nothing compared to a hotel experience. By the time it evolved to become a threat to the mainstream hospitality industry, it had already garnered a strong following. The damage was done.
This focus on creating new demand first instead of locking horns with the more established competition is a strategy start-ups would do well to adopt.
Start-ups needn’t be disruptors in order to succeed. But there are many lessons start-ups can glean from disruptors that could pave the way to success.
Disruption – What's in it for the Start-up?
Is disruption a must for start-ups?